China to create 'IT aircraft carrier' through tech megamerger

[Klaralven]

BEIJING -- China Electronics Technology Group looks to absorb a fellow state-owned enterprise and create what would be the country's third-largest information technology company, with annual revenue topping $50 billion.

The target is China Putian Information Industry Group, better known as Potevio. Both China Electronics (CETC) and Potevio are among China's so-called central companies -- a set of fewer than 100 enterprises directly controlled by the central government -- and suppliers to the military.

The merger is intended to bolster CETC's resilience to U.S. sanctions targeting group companies including Hikvision, the world's top maker of security cameras.

Eastern Communications, a publicly listed subsidiary of Potevio, said Wednesday night that the parent had informed it of a planned reorganization that would see Potevio absorbed into CETC. Authorities have yet to give the green light, according to Eastern Communications, and no time frame was provided.

One Chinese media report said the deal would create an "IT aircraft carrier." The two companies' total annual revenue of $53 billion in 2019 would put the combined entity behind only Huawei Technologies and Lenovo Group in China's IT industry.

CETC, which logged 227.6 billion yuan ($35.3 billion at current rates) in revenue that year, is said to be the only information technology supplier able to meet the armed forces' full range of needs, including networks, IT infrastructure and electronic equipment such as radar.

The company also handles electronic parts and systems for missiles and reportedly produced key components for satellites in the Beidou network, China's answer to the U.S. Global Positioning System. Its operations cover a wide variety of fields, including semiconductors and antennas for fifth-generation wireless infrastructure as well as equipment for autonomous-driving technology.

Potevio's strengths involve wireless communications and security. It supplies telecommunications systems to China's military as well as to public security and police, along with semiconductors for government networks and security and energy systems using 5G technology. The company reported 116.4 billion yuan in revenue in 2019.

https://asia.nikkei.com/Business/Business-deals/China-to-create-IT-aircraft-carrier-through-tech-megamerger

[taxi]

1. Some related info about supplies

The link says:

Meanwhile, the U.S. is working to reduce its reliance on China in the high-tech sector. President Joe Biden signed an executive order Wednesday to secure supply chains for strategic products like semiconductors. He aims to identify vulnerabilities in existing supply chains and address them through diversification and increased American output.

Washington also is urging its partners to shift away from Chinese tech. Beijing is expected to accelerate its own efforts to decouple from the U.S. in response

This article from Feb 27th talks about the resources needed for a changing supply chain.

While China has no plans to restrict shipments
China controls most of the world’s mined output of rare earths, a broad group of 17 elements that are used in everything from smartphones to fighter jets, and has a stranglehold over processing. Its dominance would leave overseas industries with few avenues to immediately secure supply if curbs were to be put in place.

The minerals have previously been touted as a possible weapon in the US-China trade war, with Beijing [then] readying a plan in 2019 to restrict shipments to hurt the American economy. The US imports about 80 percent of its rare-earth compounds and metals from the Asian nation, according to government data.
...
Earlier this week, the Financial Times reported that China is exploring whether it can hurt US defense contractors by limiting supplies of rare-earth minerals that are critical to the industry.

https://businessmirror.com.ph/2021/02/27/china-eyes-ban-on-rare-earth-technology-exports-to-hostile-countries-and-companies-sources/